Towards the end of 2019, I’d discussed how young investors can build wealth in a Tax-Free Savings Account (TFSA). Some of the top stocks on the TSX could have netted investors hundreds of thousands in tax-free profit just from a $10,000 investment in the first half of the last decade. The TSX reached record highs in late 2019, so investors will not be treated to the same bargains that they saw in the early 2010s. Still, an early investment in a top stock could be the key to securing tax-free wealth going forward.
Kinaxis
Kinaxis (TSX:KXS) has been a top performer since its initial public offering back in 2014. This Canadian technology company specializes in software solutions in supply chain management and operations planning. It has been instrumental in driving Canada to be a global leader in supply chain management software. Over the past five years, the stock has achieved average annual returns of 40%.
The company is an exciting pick to start the 2020s, as it has built a fantastic customer base. It has pulled in companies like Toyota Motors, Ford, and Volvo in recent years. Investors who are looking for exposure to artificial intelligence and machine learning development should seriously consider Kinaxis, which is working to use these technologies to power its Rapid Response software.
Shares are trading close to its 52-week high, but this is a stock that is worth betting on for the long term. Supply chain software is seeing increased demand in a fractured global trade environment, as companies look to automate complex operational tasks. Kinaxis will be a key player for years to come in meeting this demand.
Scotiabank
Scotiabank (TSX:BNS)(NYSE:BNS) is sometimes referred to as “The International Bank” in Canada due to its significant global presence. It has bet big on developing economies, especially in Latin America. Unsurprisingly, this sector powered growth in a solid 2019. The stock climbed 11% in the previous year, which lagged behind some of the top performers in its peer group.
The bank released its fourth-quarter and full-year results for 2019 in late November. It forecasts an uptick in domestic banking activity in 2020, with its Canadian operations projected to contribute 30-40% of all bank earnings. International banking is expected to bring in between 25% and 30%. Scotiabank reported fourth-quarter earnings of $2.31 billion in 2019, which was up from $2.27 billion in the previous year. This met with analyst expectations.
Revenues in Canadian Banking enjoyed an uptick on the back of 5% loan growth. Residential mortgage loans rose 5%, as the Canadian housing market enjoyed a rebound in 2019. Business lending increased 11% year over year, and deposits were up 9%. It will decide on a dividend hike in the second quarter of 2020, which is in line with its peers.
Scotiabank has delivered middling capital growth over the past decade, but its dividend stands as one of the most attractive of the big banks. It currently offers a quarterly payout of $0.90 per share, which represents a 4.9% yield. Steady income combined with capital growth is always a nice boon in a TFSA.
